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Could the Virtual be Similar to the Real? A First Look from an Efficient Markets Perspective

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  • Ruoke Yang

    (Mathematics and Computational Sciences, Department of Statistics, Stanford University, P. O. Box 14217, Stanford, CA 94305, USA)

Abstract

In recent years, increasing effort has been devoted to the study of virtual world economies due to their potential of increasing our understanding of the real world economy, and vice versa. Due to a scarce availability of reliable global data, previous virtual world economic studies have been largely limited to qualitative observations. This paper presents novel financial data and is the first to apply a time series approach to the forecasting of virtual commodity prices. The results are assessed against the random walk and, from an efficient markets perspective, evaluates the potential of virtual worlds becoming experimental simulations for the real.

Suggested Citation

  • Ruoke Yang, 2013. "Could the Virtual be Similar to the Real? A First Look from an Efficient Markets Perspective," Quarterly Journal of Finance (QJF), World Scientific Publishing Co. Pte. Ltd., vol. 3(03n04), pages 1-21.
    • Handle: RePEc:wsi:qjfxxx:v:03:y:2013:i:03n04:n:s2010139213500195
    DOI: 10.1142/S2010139213500195
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    References listed on IDEAS

    as
    1. Edward Castronova, 2008. "A Test of the Law of Demand in a Virtual World: Exploring the Petri Dish Approach to Social Science," CESifo Working Paper Series 2355, CESifo.
    2. Jegadeesh, Narasimhan & Titman, Sheridan, 1993. "Returns to Buying Winners and Selling Losers: Implications for Stock Market Efficiency," Journal of Finance, American Finance Association, vol. 48(1), pages 65-91, March.
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